Credit Card Earnings Among Large Card Issuers Soar 51% in 2004
Credit Card Management, soon to be known as Cards & Payments, Source Media's magazine covering changes in the credit card industry, has published it's 2004 Bank Card Profitability Study and Annual Report. It was featured as the cover story in the May issue.
The study found that large credit card issuers collectively made after tax return on assets of 3.7% up from 2.5% in 2003. The issuers earned $21.44 billion in 2004, a 51% increase from $14.24 billion in 2003. Low funding costs, more consumer use of plastic and timelier payments by cardholders were some reasons for the boost in profits.
Credit card companies sought to expand market share in 2004 by moving into the $125 billion fast food market and by increasing their credit card offers by mail. Bankruptcy will likely have a strong impact on profitability this year. According to industry experts, bankruptcy filings are expected in increase in 2005 because of the recently passed bankruptcy-reform. This new law may also cause an increased payment rate by cardholders who want to be certain that their debts are paid.
The Bank Card Profitability Study and Annual Report findings were compiled from 2004 annual reports, government agencies, credit card companies' financial results and interviews with financial analysts and industry consultants.
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